The Impact of UAE Corporate Tax Law on Existing Company Structures
The introduction of the UAE Corporate Tax Law has reshaped how businesses operate, structure their entities, and plan for long-term financial sustainability. While the UAE continues to be one of the most business-friendly jurisdictions, the implementation of corporate tax marks a major shift that companies must understand and adapt to. For existing businesses—whether mainland, free zone, or multinational—the new regulations require strategic adjustments to remain compliant and tax-efficient.
Understanding the Core Features of UAE Corporate Tax
Under Federal Decree-Law No. 47 of 2022, the UAE imposed a 9% corporate tax on taxable profits exceeding AED 375,000. Certain exemptions apply, including qualifying free zone income, investment returns, and specific group restructuring transactions.
However, the law’s complexity means companies must re-evaluate their financial reporting, ownership structures, transactions, and compliance obligations. Factors such as transfer pricing, related-party transactions, and the distinction between qualifying and non-qualifying income have become critical considerations.
How Corporate Tax Affects Existing Business Structures
The impact of UAE corporate tax varies depending on how a company is currently organized. Some key implications include:
- Free Zone Entities: Not all income of free zone companies is automatically exempt. Businesses must meet “Qualifying Free Zone Person” requirements to maintain 0% tax status on eligible income.
- Mainland Companies: Firms must adopt more transparent accounting practices, ensure proper expense documentation, and assess whether restructuring is beneficial.
- Group Structures: Corporate tax allows for tax grouping, but only when conditions are met. Existing holding companies or multi-entity structures may require reorganization to maximize benefits.
- Ownership and Funding Arrangements: Related-party transactions must comply with transfer pricing rules. Intercompany loans, service arrangements, and cost-sharing structures may need legal review.
Ignoring these structural impacts could expose companies to tax penalties, compliance failures, or lost tax advantages.
Why Legal Guidance Is Essential
The new law has increased the need for companies to align corporate governance, contracts, financial practices, and entity structures with UAE tax regulations. Corporate lawyers play an essential role by:
- Assessing whether current structures remain tax-efficient under the new law
- Advising on entity restructuring to maintain or improve tax positions
- Drafting or revising intercompany agreements to comply with transfer pricing
- Ensuring full compliance with documentation, reporting, and governance requirements
- Supporting businesses during tax audits or disputes
A legal approach ensures that restructuring decisions are not only tax-compliant but also aligned with long-term business goals.
How TLG: The Legal Group Assists Companies
Under the leadership of Saif Al Shamsi, TLG: The Legal Group offers comprehensive support to companies navigating the impact of the UAE Corporate Tax Law. The firm assists in evaluating existing corporate structures, identifying compliance risks, and implementing strategic restructuring plans. TLG’s multidisciplinary team ensures that corporate governance, contracts, financial arrangements, and tax compliance frameworks meet all legal standards.
Their advisory and litigation expertise helps businesses maintain operational clarity while avoiding costly penalties or disruptions.
Conclusion
The UAE Corporate Tax Law has transformed the business landscape, making structural review and proactive compliance more important than ever. Companies that understand their obligations and adapt early are better positioned for stability and growth. A strong legal strategy ensures that businesses remain compliant, optimized, and fully prepared for the evolving tax environment in the UAE.